The recent dramatic increase in demand lithium ion batteries (LIBs) in the automotive and electronic industries makes it desirable to establish sustainable recycling technology to recover cobalt from the cathode material (LiCoO2). Although the combination of physical and hydrometallurgical processes is one option for recovery of metals, the large amount of aluminum in the cathode of spent LIBs can negatively affect the process performances. Therefore, as a means to enhance the cobalt recovery from spent LIBs, we investigated the feasibility of a physical process for separation of cobalt and aluminum by thermal treatment and wet magnetic separation. Results highlighted the efficiency of the thermal treatment for conversion of the cathode material to magnetic cobalt due to (i) the presence of the more reactive lithium-deficient LixCoO(2) (x< 1), (ii) the presence of reductive aluminum and graphite from electrode supports, and (iii) the generation of CO, CH4 and C2H4, which activate reduction and carbonation. Furthermore, a slow rise in temperature during heating promoted increases of the grain size of CoO and Co and prevented the pulverization of Al. As a result, 75.5% of cobalt could be recovered from spent LIBs without contamination by aluminum.